Posted on 31st October, 2014
Posted on 31st October, 2014
by Caroline Lister
Marketing Director, VentureFounders
7 Reasons why equity crowdfunding is an excellent marketing tool
In addition to raising capital for small and fast growth businesses in an efficient way, equity crowdfunding offers the entrepreneur an interesting marketing tool, boosting the value of the actual capital raise. There are 7 key ways in which an equity crowdfunding campaign helps to market a business:
At the most simple level any fledgling business needs potential customers to be aware that they exist. Companies can, and do spend large amounts of their precious cash spreading the word about their offering. An equity crowdfunding campaign will shine a spotlight directly on to your business offering to potentially thousands of people.
2. Validating the idea
No doubt the friends and families of budding entrepreneurs have been endlessly recruited as champions of their ideas, and flag-waving mothers are an invaluable asset, but launching a business in to the big bad world is much more of a gamble. An equity crowdfunding campaign provides instant feedback on the viability of the idea, if people are willing to back it with hard cash, you are more than likely on to a winner.
3. Launching a brand
Got your logo, tick! Well it’s a start but as any established company will tell you, developing a brand that people love, trust and stay loyal too takes a great deal of time and investment. Where an equity crowdfunding campaign can help is promoting and giving visibility to your brand while reinforcing your brand personality. People investing via crowdfunding platforms will take time to understand the opportunity that they invest in and they will want to know what the brand and the company stand for. It’s your opportunity to communicate your brand values.
4. Finding customers
If they have invested, they want you to succeed, they are interested in you and are of course an instant source of potential customers (and their friends). A successful equity crowdfunding campaign that’s well structured will breed confidence in your business and can help secure new customers by enhancing the perception of your organisation.
5. Access to a powerful network
A successful fundraise through crowdfunding means that you have raised the full amount that you set out to and not a penny less. This tests out whether there are enough people willing to back you and if you have chosen your crowdfunding platform carefully they will connect you with the right contacts to grow your business and a network of supportive investors who are willing to open doors. Crowdfunding platforms set up on a equity basis will want to drive a good return to their investors and will be driven to partner with you to deliver your growth plans.
6. Building brand equity
What is it and how do you get it? The theory goes that people are willing to pay a premium for products and services from a trusted and recognised brand. By raising funds through an equity crowdfunding campaign, you will gain additional exposure for your product or service under the umbrella of an established, trusted organisation – thus enhancing the perception of your brand and providing a strong foundation for developing lifetime value.
7. PR profile
Professionally run crowdfunding platforms only take a commission when a deal is 100% completed and so will be inherently motivated for you to succeed. As a result they may well be willing to invest in publicising your campaign and at the very least using all their own brand assets and channels to support you. The power of this exposure to build your profile, aside from the other benefits of crowdfunding, makes it an attractive proposition.
Lastly, when you are preparing your crowdfunding campaign it’s worth spending some time on thinking on how to best leverage the opportunity. Ensure the crowdfunding platform you work with is going to be integral in championing your business and brand and be prepared to also invest time in working with the platform to make the most of every opportunity they can provide to further benefit your organisation.